The Hong Kong International Arbitration Centre has revised its arbitration rules. The new rules come into force on 1 November 2018.
The HKIAC last issued arbitration rules in 2013. In August 2017, it started a consultation about revision of these rules. It has now issued the final version of its new rules and has announced that these will be in force from 1 November 2018. We highlight the main changes below.
- Use of technology
There is an emphasis on the use of technology in the new rules. In particular, the new rules recognise that documents can be served by uploading them to an online repository (if the parties have agreed to use one), while tribunals are expressly encouraged to take into account “the effective use of technology” when deciding on the procedures to be used in arbitrations.
This reflects the trend that we have seen emerging, with more arbitrations being conducted entirely by email and more arbitrators preferring to receive documents only in electronic form. Major arbitration institutions such as the HKIAC do not yet require parties to use e-filing alone, but this may come in the future.
- Early determination procedure
There is a new process in the rules for determining points of law or fact at an early stage of the arbitration, on the basis that:
- such points are manifestly without merit;
- they are manifestly outside the tribunal’s jurisdiction or
- even if they are correct, no award could be rendered in favour of the party relying on them.
The process is intended to last for no more than 90 days, which can be extended only by agreement between the parties or by the HKIAC (i.e. not by the tribunal on its own).
This is similar to the early dismissal procedure that was included in the Singapore International Arbitration Centre 2016 Rules, although that is a 60-day process and refers to dismissal of “claims and defences” rather than “points of law or fact” as in the new HKIAC rules. It is also similar (though not quite as final) to the summary judgment procedures found in some national court systems.
The issue being addressed here is the problem of parties (usually respondents) making arguments that have no merit, often merely to delay the arbitration award. Arbitrators, being conscious of due process complaints, have tended to let parties run those arguments over the full course of the arbitration. The new procedure authorises arbitrators to cut short such arguments to avoid unnecessary cost and delay.
- Third party funding
The use of third party funding has been increasing in international arbitration. The arbitration law in Hong Kong has recently been amended to allow third party funding there.
The new HKIAC rules make express provision for third party funding. In particular:
- A funded party is required to give written notice to the other parties and the tribunal that a funding agreement has been made, and is required to identify the third party funder.
- The tribunal is permitted to take into account such third party funding when it determines an award of costs at the end of the arbitration.
- A funded party is permitted to pass information about the arbitration to its funder, without breaching the duty of confidentiality.
The HKIAC is one of the first arbitration institutions to include this in its rules. Such provisions are important for the identification of any potential conflicts of interest, as more and more arbitrators are being appointed to advisory roles at third party funders. Notification of the involvement of a funder can also sometimes change the dynamics of a dispute since it means the funded party has substantial backing and has had its claim reviewed by the funder.
- Other changes
There are a number of other changes in the new rules, including:
- There is a new 3-month time-limit for tribunals to render their awards at the end of the arbitration. The tribunal must also notify the HKIAC and the parties of the expected timing of delivery of the award.
- The test for the granting of interim relief that arbitrators must follow is now expressly incorporated into the emergency arbitration provisions of the HKIAC Rules (in common with many other arbitration rules, the 2013 HKIAC Rules did not specify the relevant test in emergency arbitration).
- The rules on multiparty and multi-contract disputes have been revised, with a new provision allowing arbitrations to be started involving several related contracts if the arbitration agreements in those contracts are “compatible“. Arbitrators are also given express powers to manage concurrent arbitrations, including conducting them at the same time or one after the other, or suspending one arbitration pending a determination in another.
- There is express provision for an arbitration to be started and then suspended to allow a mediation to take place, with a return to the arbitration if the mediation fails or if the parties want the arbitrators to issue an agreed award (an “arb-med-arb” procedure, similar to the SIAC-SIMC arb-med-arb protocol in Singapore).
The HKIAC has updated its rules to reflect new developments in international arbitration, with an emphasis on further promoting procedural efficiency. The provisions about technology and third party funding, in particular, put these rules at the forefront of international arbitration. We expect other arbitral institutions to introduce similar provisions when revising their own rules in the future.